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US IRS is focusing on FATCA Intergovernmental Agreements currently "in effect"

In Announcement 2016-27 , released 29 July 2016, the US Internal Revenue Service (IRS) updated guidance for jurisdictions that are treated as having an Intergovernmental Agreement (IGA) in effect for purposes of the Foreign Account Tax Compliance Act (FATCA).


To facilitate the implementation of the FATCA rules, the United States negotiated IGAs with a number of partner jurisdictions to overcome local law restrictions. Given the time needed to agree to the terms of each IGA and, for Model 1 IGAs, the time needed to put in place local law and guidelines, certain IGAs were treated as “in effect” as long as the jurisdiction was taking the steps necessary to sign the IGA and bring it into force within a reasonable period. Foreign Financial Institutions (FFIs) resident or located in jurisdictions that had an IGA treated as in effect were permitted to register on the IRS FFI Registration website as registered deemed-compliant FFIs and, under the terms of the IGA, fulfill their reporting responsibility once the IGA came into force.

Announcement 2016-27

As of the date of the Announcement, 83 IGAs have been signed, 61 of which are in force. There are 22 IGAs that are signed but not in force and an additional 30 IGAs that are agreed to in substance (unsigned). The charts below detail which countries have not signed agreements and which have. A complete list of the status of all countries may be found on Treasury’s website.

IGAs In-Effect as of 3 August 2016, in Accordance with IRS Announcement 2016-27

Agreements In Substance
(Not Signed and Not In Force)


Agreements Signed (Not In Force)






Antigua and Barbuda















Cabo Verde




San Marino




Costa Rica

South Korea





St. Lucia

Dominican Republic

Saudi Arabia












Hong Kong

United Arab Emirates







Trinidad and Tobago











According to the Announcement, Treasury will begin updating the IGA List on 1 January 2017, to reevaluate the progress of the 52 jurisdictions that have not brought their IGAs into force. This may result in the removal of certain jurisdictions from the list of jurisdictions deemed to have their IGAs in effect. Each jurisdiction with an IGA that is not yet in force and that wishes to continue being treated as having an IGA in effect must provide to Treasury by 31 December 2016, a detailed explanation as to why the jurisdiction has not yet brought the IGA into force and a step-by-step plan that the jurisdiction intends to follow in order to sign the IGA (if it has not yet been signed) and bring the IGA into force, including expected dates for achieving each step.

In initially evaluating whether a jurisdiction will continue to be treated as if it has an IGA in effect, Treasury will consider whether: “(1) the jurisdiction has submitted the explanation and plan (with dates) described above; and (2) that explanation and plan, as well as the jurisdiction’s prior course of conduct in connection with IGA discussions, show that the jurisdiction continues to demonstrate firm resolve to bring its IGA into force.”

The Announcement also provides that Treasury will continue to update the list of jurisdictions treated as having an IGA in effect and may remove jurisdictions if they fail to adhere to the timeline provided to Treasury or there are other facts demonstrating a lack of resolve to finalize the process.

Under the terms of the Model IGAs, when a jurisdiction moves from “in effect” status to “in force” status, all past due FATCA reports (e.g., tax years 2014, 2015, and potentially 2016) will be due on the following 30 September. FFIs that meet the 30 September FATCA reporting deadline for all past due reports will not be held in significant non-compliance.

If Treasury determines that an IGA is no longer in effect, a jurisdiction will continue to be treated as having an IGA in effect for at least 60 days. To that end, FFIs in such a jurisdiction will have at least 60 days notice to update their FATCA registration to Participating FFI (unless the FFI qualifies for an exemption under the FATCA regulations).


As a Participating FFI, the entity will be required to comply with FATCA by following the rules of the IRS Treasury Regulations (rather than the rules in the proposed IGA) and will likely need to revise its processes and systems to conform to the Regulations (including the imposition of 30% FATCA withholding on withholdable payments). The Participating FFI will need to immediately implement the rules of the IRS Regulations for “new” accounts (i.e., accounts held by account holders on-boarded on or after the effective date of the new FFI Agreement), but for “pre-existing” accounts will need to complete the due diligence review procedures in accordance with the IRS Regulations within one year of the effective date of the new FFI Agreement for high-value individual account holders and for all other pre-existing account holders within two years.

An FFI that does not timely register as a Participating FFI will be presumed to be a Non-Participating FFI. Any FFI in one of the 52 jurisdictions that may lose their “in effect” status should strongly encourage their local government to finalize the IGA process and/or work with local industry groups to do the same.

FFIs that must update their registration should also consider whether they must furnish new FATCA documentation (i.e., Forms W-8) to the financial institutions and counterparties with which they do business within 90 days to avoid being subjected to FATCA withholding.

Withholding agents should monitor Treasury’s IGA List for the anticipated changes in IGA status, as account holders moving from the status of a Reporting Model 1 FFI under an IGA to a Participating FFI will represent a “change in circumstance” that requires the collection of a new form or the imposition of FATCA withholding.

For a change in circumstance under Chapter 4, withholding agents have 90 days to re-document the account or must apply the presumption rules starting on day 91, and impose FATCA withholding where applicable.

A change in circumstance to a Chapter 4 status would not invalidate Chapter 3 status certified on a Form W-8, so a withholding agent would not have to withhold under Chapter 3 because a payee’s Chapter 4 status changed.

EYG no. 02364-161US

Download this Tax Alert as a PDF file

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